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SEBI opens door for fintechs to enter mutual fund industry

The Securities and Exchange Board of India (SEBI) has decided that sponsors of Asset Management Companies (AMCs) need not meet the profitability criteria to apply for an AMC or mutual fund license, SEBI's Board said on Wednesday. The move opens the door for a number of fintechs who currently distribute mutual funds to begin designing and selling their own mutual fund schemes. Prior to this decision, fintechs would have had to prove its profitability track record to the markets regulator, in addition to having a minimum net worth of ₹50 crore. SEBI has decided that fintechs that can demonstrate having a net worth of ₹100 crore can apply for a mutual fund license, provided they maintain this net worth continuously for 5 years. "To facilitate innovation and enhanced reach to more investors at a faster pace including tech-enabled solutions, sponsors that are not fulfilling profitability criteria at the time of making application, shall also be considered eligible to sponsor a mutual fund subject to having a net-worth of not less than ₹100 Cr. for the purpose of contribution towards the net-worth of the Asset Management Company," SEBI said. Some of the top fintechs in the country presently act as distributors or intermediaries for mutual fund schemes. Investors use these fintech platforms to invest into mutual funds, primarily due better customer experience, a wholly technology enabled platform and reduced or zero fees. In the case of Paytm Money, which is a registered investment advisor with SEBI,  investors can invest a minimum…

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